Change in state law will raise school taxes in some communities

WORK being done at Dakota High School football field. (RAY SKOWRONEK/THE MACOMB DAILY)

Thousands of Macomb County residents will pay hundreds of dollars more in school taxes beginning this year as the result of tightened requirements on how schools repay funds borrowed through bond issues.

A state law enacted by a lame-duck Legislature in the waning days of 2012 changes the terms of how schools repay loans they secured through the state-financed School Bond Loan Fund.

Districts that participate in the program now must recalculate their millage rates annually to ensure the schools generate enough money to meet the new financial obligations in a timely manner.

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The bottom line: higher taxes for homeowners and uncertainty when, or if, those rates will decline.

“It’s tough, especially when it’s out of our control,” said Keith Wunderlich, superintendent of New Haven Community Schools. “This is something that was done by the Legislature and is out of our hands.”

Of those, at least five will raise their debt retirement millage rate for 2014:

• Chippewa Valley, from 7.65 to 8.64 mills, a 13 percent increase;

• Clintondale, from 12.65 to 13 mills, up 3 percent;

• Mount Clemens, from 9.42 to 11.6 mills, a 23 percent jump;

• New Haven, from 7 to 7.82 mills, an increase of nearly 12 percent.

• Van Dyke, from 7 to 9.23 mills, a 32 percent increase.

Three districts – Armada, East Detroit and L’Anse Creuse – reported no change in their rates for 2014. Anchor Bay and Fraser did not provide millage rate information in the time allotted by The Macomb Daily.

The School Bond Loan Fund program was created many years ago as a revolving fund to provide schools an opportunity to borrow money at favorable rates and without using other financial institutions.

The districts would receive money from the fund for their projects, and then repay the loans into the fund over time so other districts could benefit as well.

Districts also could borrow additional sums by extending their obligations for several years. That eliminated the need to increase the debt retirement millage rates for taxpayers. Prior to the recent increase, Chippewa Valley residents, for example, had paid the same 7.65 mills since 1979.

The loan program “worked and worked well from the 1960s through 2009,” said Scott Sederlund, assistant superintendent of business operations for Chippewa Valley Schools.

But in the wake of the recession of 2008, property values plummeted across Michigan. That resulted in less revenue for school districts.

“Nobody in their right mind could have predicted property values would decline for four straight years,” Sederlund said.

But they did, and that changed the equation.

“The state got nervous and said, ‘How are we going to be able to afford all this?’” he said.

So on Dec. 27, 2012, the Legislature passed the new law effectively calling in its markers. State officials told the schools they must repay their loans within a new 30-year time frame, even it meant raising millage rates.

Taxpayers have no direct say in the decision. By approving the bond issues that resulted in the loans, they agreed to assume responsibility for repayment. They have no choice but to pay the higher rates.

But the news isn’t all bad.

As a practical matter, the increases are nominal, for the most part. Chippewa Valley officials estimate, for example, that the owner of a home with a taxable value of $100,000 will pay $99 more per year – about $8 per month. If districts discover during their annual reviews that property values have increased enough, they can roll back the millage rates.

But Wunderlich wondered if the sudden surge in tax rates will damage credibility the next time school officials ask for a bond issue.

“It makes things tougher the next time,” he said. “I get it. I’m a homeowner, too. Nobody wants to pay any more taxes than they have to.”